It's Hard To Make Money in Deepwater, Even With Billions of Barrels To Produce

The Libra Pioneer FPSO is expected to begin producing oil and injecting water and gas into the Libra field later this year. The long-term production test will guide future development. Source: Petrobras.

After oil prices plunged in 2014, the Libra discovery, which could be the largest in Brazil’s prolific pre-salt offshore play, looked like an iffy proposition.

“We worried at that time: Do we have a future for a deepwater project?” said He Baosheng, deputy general manager for subsea wells and facilities for the Libra project, during a panel discussion at the 2017 Offshore Technology Conference (OTC).

Petrobras’ chief executive officer (CEO) back then, Oswaldo Pedrosa, said the break-even price was greater than USD 55/bbl, but added that he expected oil prices would rise, making Libra profitable by 2019, when commercial production was expected to begin.

Since then the thinking has flipped. With the price of oil stuck around USD 50/bbl, now the goal for Petrobras and its four partners on Libra is to lower the break-even price to USD 35/bbl, said Fernando Borges, executive manager for the Libra project, adding “it is very important to have a low breakeven.”